Finnish Paper Industry Is Hot Short Among Hedge Funds

Finnish Paper Industry Is Hot Short Among Hedge Funds

Stora Enso OYJ (PINK:SEOAY) (HEL:STEAV) (HEL:STERV), a Finnish company involved in biomaterials and paper making, saw some short interest activity in the past few weeks. AKO Capital initiated a 0.54 percent short position in Stora Enso OYJ (PINK:SEOAY) (HEL:STEAV) (HEL:STERV) in the last week of February. Merchants’ Gate Capital and Maverick Capital both increased their short exposure in the company as well.

For full list of hedge funds with short positions or information on their respective stakes, visit out page for Hedge Fund Short Positions In Europe.

Another paper maker, UPM-Kymmene Corporation (PINK:UPMKY) (HEL:UPM1V) is also held by a number of short sellers. Stora Enso OYJ (PINK:SEOAY) (HEL:STEAV) (HEL:STERV) and UPM-Kymmene Corporation (PINK:UPMKY)(HEL:UPM1V) are the largest paper makers in the European region.

The bear case for both companies is focused on the reduced demand of paper and related materials as dependence on softcopy storage becomes more popular with consumers. Just today, analysts at Morgan Stanley cut ratings of both stocks from overweight to equal weight, saying that 25-40 percent of the demand will shrink in the next decade in Europe. Jim Chanos is bearish on the paper industry.

The total short interest disclosed to the Finnish regulatory authority in Stora Enso OYJ (PINK:SEOAY) (HEL:STEAV) (HEL:STERV) amounts to 7.6 percent of outstanding shares while 3.79 percent of UPM-Kymmene Corporation (HEL:UPM1V) are held in short bets. Stocks of both companies are trading down today, UPM fell 0.8 percent while Stora Enso is down 1.8 percent as of now, possibly as a result of Morgan Stanley’s weaker outlook.

The other hot stock in Finland is of course Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) where there has not been any major activity except that Steadfast Capital cut their short to 0.49 percent. Those who increased their short positions in Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) were Discovery Capital,  SAC Capital and Soroban Capital while Fest N.V and Fore Research slightly reduced their positions.

Odey Asset Management’s Odey European was the star performer among last year’s top performing hedge fund list; this year Odey European gained 9.24 percent in January alone. Odey increased its short bet in Kemira Oyj (HEL:KRA1V) to 1.13 percent of the company; Kemira is involved in the paper industry, oil processing and refining and water quality management.

The stock fell sharply at the beginning of February and is down 5 percent YTD. Kemira has been divesting its stake in some of its units in the past months. Odey also initiated a new position of 0.58 percent in Metso Oyj (PINK:MXCYY) (HEL:MEO1V); Lansdowne Partners is also shorting the same company.

Metso, another company involved in paper machines and mining industry equipments, fell sharply on March 4 as ABG Sundal Collier analysts’ issued concern over Metso’s declining orders. Odey disclosed the short position on the same day. Metso Oyj (PINK:MXCYY) (HEL:MEO1V) is down 1.72 percent since then.

Outotec Oyj (HEL:OTE1V), a frequently shorted stock in Finland, has recieved some attention from Highbridge Capital which started a new position. The same stock is shorted by other firms including: Maverick Capital, Millenium Capital Partners and Carlson Capital.

About the Author

Tabinda Hussain
Tabi covers hedge funds for ValueWalk. Although Tabi is an expert in hedge funds, her academic background is in Biology. Follow her on twitter @tabihussain